US exempts EU nations from Iran oil sanctions

WASHINGTON—The U.S. granted exemption from Iran sanctions to 10 European countries and Japan on Friday because all of them have significantly reduced or halted oil imports from the Islamic Republic.

Japan continues to import oil from Iran but all European Union countries halted them a year ago.

American sanctions are designed to pressure Iran to curb its nuclear program, which Washington suspects is aimed at producing weapons. Iran has repeatedly insisted it is only for generating electricity and medical research.

The most ambitious U.S. tactic has involved pressuring countries around the world to cut commercial ties with Iran or face a series of restrictions on what type of business they can conduct in the United States, the world's largest market. But the Obama administration has been granting exemptions to a number of mostly Asian countries that rely on Iranian oil on condition that they significantly reduce their imports over time.

The entire European Union has not purchased Iranian oil since July 1, 2012, the U.S. State Department said in a statement. Because of that reduction, the U.S. said 10 EU countries had qualified for six-month sanctions exemptions: Belgium, the Czech Republic, France, Germany, Greece, Italy, Netherlands, Poland, Spain and Britain.

The State Department said a total of 20 countries have continued to significantly reduce their crude oil purchases from Iran. China remains Iran's top trading partner and its No.

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1 client for oil exports, with Japan, India and South Korea among other top purchasers.

Despite plummeting sales overseas, Iran remains one of the world's largest oil producers. Its exports bring in tens of billions of dollars in revenue for the country's hard-line leaders, money the U.S. is trying to cut off.

A senior U.S. official told The Associated Press last week that sanctions have reduced Iranian oil exports by 58 percent since late 2011. He also said the U.S. has concluded that nearly half of Iran's monthly earnings from crude oil exports are accumulating in accounts overseas because of sanctions that restrict Tehran's access to the money.

But economists said Iran is also finding ways to work around sanctions, for example by increasing exports of non-oil, non-sanctioned goods.

The news of the European exemptions came as successful legal challenges to European sanctions on Iran mounted.

An EU court said it would throw out penalties imposed on eight Iranian banks and businesses for their alleged ties to Iran's nuclear program because there wasn't sufficient evidence to justify the sanctions imposed by the bloc.

The U.S. was disappointed with the ruling.

"The evidence linking these banks to Iran's illicit nuclear activities is clear and strong, and no financial institution anywhere should allow these Iranian banks to transact with them," the Treasury Department said in a statement.

In other developments, the Treasury Department said earlier Friday that it was expanding sanctions to target a network allegedly helping the government evade measures aimed at curbing oil exports.

The U.S. accused Iran of using front companies, financial institutions and businessmen "willing to engage in deceptive transactions to conceal the direct involvement" of the Tehran government in global oil transactions.

The U.S. says the new sanctions target the network of Seyed Seyyedi, an Iranian businessman and director of Sima General Trading, as well as a network of companies based in the United Arab Emirates that Seyyedi allegedly controls. They also target National Iranian Oil Co. representatives in Europe.

The U.S. previously sanctioned Sima General as part of a network of Iranian government front companies allegedly involved in a sanctions evasion scheme with a Greek businessman.